Interviews with author(s) of “Frank McKenna”

CBC interviewer Evan Solomon interviews long-time Canadian politician and Deputy Chair of TD Canada on Power and Politics. Below is the transcript from that show.

EVAN SOLOMON (CBC-NN): Welcome back to Power & Politics. A very big name has been in Ottawa today and yesterday. Whenever he arrives in this city he likes to stir things up. First, he picked up an Order of Canada, then he was here to launch a new book. He was Canada's former Ambassador to Washington, the former Premier of New Brunswick for a decade, and now he's Deputy Chair of TD Financial and he's got a lot of things to say about the current state of our economy and what the government should do. It is, of course, Frank McKenna.

EVAN SOLOMON: It's interesting to get a book about yourself, I mean when you read this book, the Frank McKenna you see on paper is that the same Frank McKenna that you think of yourself as? I mean, is the reflection accurate?

FRANK MCKENNA: Well, look, I think the author is terrific, Harvey Sawler. I didn't write the book, he wrote the book, so it's his book. No, the answer is no. I see myself as a guy who loves to be in sweat pants and likes to get out for an early morning walk and read the newspapers and watch baseball or hockey on TV and hang around with the grandkids. I don't see much…

EVAN SOLOMON: Ambassador, Premier, business man…

FRANK MCKENNA: I don't see that.

EVAN SOLOMON: Tell me about the transition from politics to business, you and I have spoken a couple of times about your current role with the bank. What political skills or what did you learn from politics that translates into the life of business?

FRANK MCKENNA: Well you know, I think a lot of the skill sets are similar: respect for people, decision-making, team approaches, inspiration, communication, those are all things that are transferable skills from politics to business.

EVAN SOLOMON: But level of intensity, how does politics compare to business?

FRANK MCKENNA: It varies, you know, if you're in the middle of big deals then business can be very intense. In politics, I was in the middle of everything from Meech Lake to Charlottetown Accord to Free Trade debates, so I had some pretty intense times. When I was a trial lawyer I was in the middle of a lot of murder cases, that's pretty intense too. Everything you do has its own level of intensity and level of stress.

EVAN SOLOMON: Do you ever, given all that, I mean you've heard that comment, people say why didn't Frank McKenna try to become Prime Minister, do you ever get that, lying at night, and think should I have made a run at the big job, the Prime Minister's job.

FRANK MCKENNA: No, I don't have any regrets in my decisions. If there's a regret I have is that I disappoint people and…

EVAN SOLOMON: What do you mean by that?

FRANK MCKENNA: Well, those people who would wish otherwise. I feel in some small way that I may be letting those people down, but do I have regrets personally? No, I'm comfortable with my life, happy with my life.

EVAN SOLOMON: Let's talk about the U.S. Ambassador, being the Canadian Ambassador in the U.S. There's a big issue right now. The U.S. is facing some very critical problems. You've actually been there, what is the big challenge now for the new, Gary Doer, the new Canadian Ambassador to the U.S. that may be different from your challenges?

FRANK MCKENNA: I think actually a lot of those issues are surfaced in the book that Harvey Sawler wrote. If there's a really interesting part of the book that's kind of new news it's probably that. I don't think it's much different from the issues that I faced but it's different from the issues of 20 and 25 years ago. We live in a different media world. We live in a world of social networking now, we live in a world with thousands of outlets, whether they be newspapers or whether they be specialty channels, 24-hour a day news cycles, so in that space, if Canada wants to be heard, it has to take its message differently to the people of the United States.

EVAN SOLOMON: Give us some advice. What would you say? The methods that Canadians and the Ambassador has to do?

FRANK MCKENNA: Well I think it's a lot more than cocktail parties in Washington and it's a lot more than the President. As much as we might like him in Canada, he doesn't have control over a lot of the public policy in the United States. He's influential, yes. We have to get to all of the congressional leaders, we have to get out to the states, we have to get out to interest groups across America, we have to have the voice of Canada known in the United States of America, and that means that every time something is said about us we don't like we have to be on national TV, repudiating it, it means we have to be in their face, the same as…

EVAN SOLOMON: I mean are you referring to specifically, I mean, a lot of disparaging remarks recently about the Canadian health care system…

FRANK MCKENNA: Yes.

EVAN SOLOMON: ... as the U.S. health care debate continues. Do you think the government has been defending Canada in a robust enough way?

FRANK MCKENNA: Well, I'm not going to talk about the government, but I'm going to make the point that my view is whenever there's misinformation in the United States of America we have some responsibility to correct it. I had that obligation when they would talk about terrorists crossing the border from Canada. I've been on Fox News, I've been on CNN, challenging that, and people have had to back down.

And in the case of our health care system, directly to answer your question, I think that we should be repudiating a lot of the erroneous information. We should make it clear. We're not trying to impose our health care system on you but if you're going to talk about our health care system you should be in possession of the facts. Facts are our health care system costs half as much per capita as yours and yet our people live longer, our infant mortality rates are better and we cover every Canadian. Whatever other faults we have, we do those things.

EVAN SOLOMON: Let's talk about banks. Obviously banking is a key part of your life right now. There's a very interesting article recently by Eric Sprott and David Franklin in the Financial Post, and Eric Sprott, very well-known investor, his insight well respected in the financial community, he says "Let's state this outright: the United States government is on a trajectory to default on its obligations." This is a major claim, that it will go bankrupt, it can't afford to do a health care and it is in serious financial trouble, verging on the point of defaulting. What's your view as someone who now works in the banking sector? Is that overstating it what are the consequences of this?

FRANK MCKENNA: Yeah, I think there's an apocalyptic tone to that that is probably not warranted today. Do I think the United States is in a long term secular trend towards unsustainable debts and deficits? I do. And one has to be fair, and try to be balanced here. This did not start under Barack Obama. This started over a period of time, but particularly in the last eight years, when massive tax cuts that were unfunded took place in the United States of America and significant expenditures took place, particularly the Iraq war and the Afghanistan war, etc. The Iraq war is costing the American public $6,000 a second.

So none of that is funded, and so when you add that onto the stimulus and the economy tanking you're getting deficits which at today's level, are $1.4 trillion per year and are unsustainable. It's 10 percent of GDP this year. A sustainable level is 3 percent of GDP. There is no path that we see in front of us to get it down to that level.

EVAN SOLOMON: So what does that mean for Canadians? Bring that home, for Canadians? What does that mean when you see that dramatic situation? How do we cope? We have a strong dollar because of the weak American dollar. Our exports are getting killed because of that. Our economy is so tied to the U.S. when it's tanking we tank.

FRANK MCKENNA: Right.

EVAN SOLOMON: What do you tell Canadians about the forecast then?

FRANK MCKENNA: It's all bad news for us, because 40 percent of our economy is sold to the United States of America, so if their economy's in the tank and they're not buying it affects us, and what we produce. So that's number one.

Number two, inevitably, the United States, if the deficit continues at these levels they have to borrow more, and there's a law of supply and demand with respect to borrowing. The more you borrow the more you have to pay for it. Higher rates of interest. As their rates of interest go up their dollar will start collapsing, increasingly, and as inflation gets into their economy their dollar will collapse. Our dollar will go up, in all likelihood, and the result of that, of course, is that makes us quite uncompetitive.

EVAN SOLOMON: So you're not optimistic.

FRANK MCKENNA: I'm... I'm not...

EVAN SOLOMON: I mean, for us that's a very pessimistic forecast for us, despite... they always say our banks are solid, but that might be something that's out of control. The Governor of the Bank, Mark Carney, may not be able to talk the dollar down. And even the government, what do you do then?

FRANK MCKENNA: Well, to start with...

EVAN SOLOMON: What's the response?

FRANK MCKENNA: If this scenario were to play out what we... I don't think we would end up seeing a falling off the cliff. What we would see is anemic growth in Canada and the United States. But I don't think that we should be that apocalyptic, because I don't think the status quo will prevail.

In the last day, although it wasn't referenced there, the budget director in the United States spoke publicly saying, this is not sustainable. We have got to take action in order to reduce the debt-to-GDP ratio back to three percent.

In Canada we know that the will of Canadians will be to try to get our debt back under control again. So I think the political will is going to shirt in the coming months from stimulating the economy to trying to get the spending under control.

EVAN SOLOMON: Frank McKenna, last question, here again, in Canada we've got deficit and debt issues now, you know, our ballooning deficit. Will we have to cut programs? Will this government have to cut programs? I mean, let's have an honest discussion...

FRANK MCKENNA: Right.

EVAN SOLOMON: ...or raise taxes, in your mind? To cut this deficit?

FRANK MCKENNA: Yeah. Honest discussion, we cannot cut the Canadian deficit with the kind of hot air that we have heard today. The Canadian deficit is going to require measures that were as tough as the ones we went through in the 1990s. And that is going to include reducing transfers to the province, I hate to say it, probably some revenue increases, hate to say it, and program cuts and restraint.

EVAN SOLOMON: Revenue... by the way, that's tax increases.

FRANK MCKENNA: It's a word that people use for tax increases when they don't want to say tax increases.

EVAN SOLOMON: Yeah. You can't take the politician out of the man. Before I leave you I just want to say congratulations on the Order of Canada.